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The    further   risir..      f 
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finnnci^il    storm. 


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THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


I 


Gold 


Cbe  Further  Kisitig  of 
Prices  and  tbe  Coming 
Financial   Storm 

BY     C.       A.      BOWS  HER 


Every  American  should  now  prepare  his 
mind  for  the  coming  financial  storm.  The 
crisis  of  1907  is  but  the  prelude.  It  is  the 
token  of  a  greater  and  more  destructive 
blow.  By  knowing  of  the  absolute  standard 
of  value,  the  American  people  can  success- 
fully ride  the  coming  financial  storm  and 
be  masters  of  their  circumstances. 

This  is  the  first  treatise  ever  to  present 

an   absolute   standard  of  value  for  the 

system  of  finance. 


PRICE  TWENTY  FIVE   CENTS 
IN  THE   UNITED   STATES 


Any  financial  system  not  based  on  the 
machine  power  of  industry  is  now  false.  It 
has  no  relation  to  business. 


1910 
COPYRIGHT  BY 
C.  A.  BOWSHER 


When  the  quantity  of  tbe  media  of  ex- 
change effects  the  prices  of  commodities  on 
the  market,  there  is  no  money  system.  It  is 
but  a  refined  system  of  barter. 


Let  us  understand  our  problems  before  we 

solve  them; 
Let  us  knozv  our  ills  before  we  take   the 

cure. 

General 

EVERY  American  should  now  pre- 
pare his  mind  for  the  coming  fi- 
nancial storm.  The  crisis  of  1907 
is  but  the  prelude.  It  is  the  token  of  a 
greater  and  more  destructive  blow.  The 
present  discussion  of  high  prices  and 
the  rising  cost  of  living  begins  the  open- 
ing of  a  great  and  profound  movement 
which  is  to  dominate  not  only  the  think- 
ing of  the  American  people,  but  that  of 
the  entire  civilized  world.  In  the  formu- 
lation and  solution  of  this  great  world 
problem  of  finance,  the  American  people 
by  their  natural  position  are  compelled 
to  take  the  lead. 

Rightly  to  understand  this  question, 
a  point  of  view  must  be  assumed  such 
that  the  greater  factors  of  the  problem 
van  be  seen  in  their  proper  working  rela- 
tions. Their  program  of  operation  must 
be  plainly  discerned  and  its  necessary  or- 
der of  development  must  have  a  rational 
scheme  of  interpretation.  In  the  Ameri- 
can business  world  is  to  be  seen  the  per- 
formance of  this  movement  in  its  great- 

488368 


The  Further  Rising  of  Prices 


est  variety  and  most  intense  forms  of  ex- 
pression of  any  place  on  the  earth.  The 
more  interested  the  American  people  be- 
come in  the  cause  of  rising  prices,  the 
more  necessary  is  it  that  they  shall  think 
correctly  about  it.  Who  can  give  the 
best  interpretation  of  this  universal  pre- 
dicament of  mankind  and  its  probable 
outcome  will  gain  the  undivided  atten- 
tion of  the  world. 

With  the  proper  perspective,  it  can  be 
easily  seen  that  the  prices  of  all  commodi- 
ties will  continue  to  rise  and  the  worth 
of  all  gilt  edge  bonds  will  continue  to 
fall  until  the  financial  world  shall  discard 
its  depreciating  standard  of  value.  Who 
intends  to  be  edified  to  any  great  extent 
on  this  subject  of  which  the  rising  cost 
of  living  is  but  an  episode,  must  ever 
keep  in  view  the  ultimate  establishment 
of  the  absolute  standard  of  value.  Other- 
wise, the  seeker  after  truth  on  the  prob- 
lem will  be  like  the  scout  without  a  trail 
or  the  pursuer  without  a  clew. 

The  American  j)eople  delight  in  think- 
ing big  things  and  doing  big  things  in  a 
big  way.  They  are  of  the  spirit.  They 
are  the  practical  idealists  consummate. 
This  has  been  their  characteristic  since 
the  foundation  of  their  government.  They 
have  a  great  destiny  and  they  feel  their 


The  Growing  Use  of  Machine  Power  3 

sense  of  being  limited  unless  some  great 
problem  is  before  them  for  solution.  The 
present  problem  is  surely  American.  It 
is  the  greatest  problem  yet  presented  for 
the  contemplation  of  man.  To  solve  it 
correctly  means  to  probe  to  their  bottoms 
and  to  their  every  extremity,  every  philos- 
ophy and  every  psychology  now  domi- 
nating the  thought  of  man.  It  will  result 
in  the  establishment  of  an  American  phi- 
losophy as  no  other  system  of  thought 
will  be  able  to  reduce  the  problem  to 
comprehension.  Such  is  the  requirement 
to  establish  in  the  world  system  of  fi- 
nance, the  absolute  standard  of  value. 

The  meaning  of  value,  of  the  depre- 
ciating standard  of  value  and  the  abso- 
lute standard  of  value  must  be  thor- 
oughly understood  if  any  satisfaction 
whatever  is  to  be  got  as  to  the  outcome 
of  this  persistent  rising  of  prices.  The 
discussions  in  congress  and  legislature, 
in  pulpit  and  chair  and  in  forum  and  press 
will  result  in  so  much  persiflage  if  some 
criterion  cannot  be  found  for  the  guidance 
of  the  inquiry.  No  political  economist 
so  far,  has  yet  presented  a  scintilla  of 
agreeable  information  on  the  subject  of 
value.  Many  of  them  have  given  it  up 
as  a  mysterious  and  undefinable  proposi- 
tion.    Value  means  power. 


The  Further  Rising  of  Prices 


The  establishment  of  the  American  re- 
public was  contemporaneous  with  the  ad- 
vent of  machine  power.  The  develop- 
ment of  the  American  republic  has  been 
proportional  to  the  development  of  the 
machine  power  of  industry.  Its  progress 
and  welfare  are  now  wholly  dependent 
upon  the  adjustment  of  this  machine 
power  to  its  system  of  finance.  The 
amount  of  machine  power  operating  in 
American  industry  is  now  over  100,000,000 
horse  power  or  800,000,000  man  power. 
It  is  increasing  at  a  prodigious  rate.  It 
is  the  most  fundamental  and  important 
thing  to  understand  in  the  whole  ques- 
tion of  rising  prices.  An  unit  of  energy 
is  the  absolute  standard  of  value.  It  is 
an  unit  of  machine  power.  It  is  the  kilo- 
watt hour. 

The  advent  of  machine  power  has 
changed  the  thinking  of  all  men  as  to 
the  problem  of  getting  a  living.  Prior 
to  its  appearance,  it  was  considered 
proper  by  many  to  look  upon  poverty  as 
a  natural,  an  honorable  and  a  necessary 
condition  of  man.  Its  advances  toward 
the  American,  however,  are  hotly  re- 
sented. The  rising  of  prices  faster  than 
the  rise  of  wages  and  salary  or  the  fall- 
ing of  prices  below  the  cost  of  production 
provokes   him   to   instant   alarm.      Either 


The  Depreciating  Standard  of  Value  5 

of  these  trends  of  prices  brings  great 
portions  of  the  people  toward  the  line 
of  poverty.  Prior  to  1896,  it  was  the 
rural  people,  the  populist  and  the  gran- 
ger, to  complain.  Since  1896,  it  has  been 
the  city  people  to  complain  and  great  is 
their  cry  now  heard  throughout  the  land. 

Before  the  advent  of  machine  power  in 
the  affairs  of  business,  man  power  was 
the  basis  for  rating  and  performing  all 
work.  Man  power,  therefore,  was  the 
basis  of  the  prices  of  all  commercial 
things.  Some  of  these  things  so  rated 
were  silver  and  gold.  It  was  agreed  by 
statute  that  1.29  units  of  man  power  were 
necessary  to  get  an  ounce  of  silver  and 
20.67  units  of  man  power,  to  get  an  ounc^ 
of  gold.  These  notions  were  established 
when  flour  was  worth  $16.00  a  barrel, 
wrought  iron  $100.00  a  ton,  and  traffic  20 
cents  a  mile  ton. 

Since  that  day,  business  has  more  and 
more  adapted  itself  to  the  use  of  machine 
power.  No  commodity  on  the  market 
today  would  be  possible  of  production 
without  its  use.  It  is  infinitely  more  ef- 
fective than  man  power  in  the  production 
of  wealth.  The  prices  of  all  commodities, 
therefore,  have  been  greatly  reduced  since 
the  days  of  Washington.  They  reached 
the    lowest    record    in     1896    when     the 


The  Further  Rising  of  Price* 


American  people  decided  to  buy  silver 
on  the  machine  power  basis  of  production 
rather  than  on  the  man  power  basis  as 
was  fixed  by  congress  in  1792. 

Since  1896  the  entire  business  world 
has  turned  its  attention  to  the  only  other 
commodity  whose  price  is  set  on  the  man 
power  basis.  The  various  crafts  of  busi- 
ness have  now  begun  in  unison  to  raise 
the  prices  of  their  commodities  on  the 
market  against  this  remaining  commodity 
of  privilege  which,  of  course,  is  gold. 
Every  compact  and  combination  for  the 
control  of  prices,  whether  of  individuals 
or  of  corporations,  is  but  exponent  of  the 
necessity  of  business  for  the  demonetiza- 
tion of  gold.  The  excessive  profit  in  min- 
ing the  yellow  metal  compels  all  other 
lines  of  trade,  in  no  small  degree,  to  strive 
to  form  craft  monopolies  to  hold  their 
proper  prices  on  the  market.  Any  restric- 
tion against  these  formations  is  now  ob- 
viously an  egregious  error  in  business. 

The  coming  financial  storm,  therefore, 
is  the  coming  turmoil  of  corporate  busi- 
ness in  getting  rid  of  its  gold  standard 
of  value.  The  force  of  high  and  rising 
prices  is  also  operating  with  increasing 
intensity  in  the  banking  world.  It  is  un- 
dermining credit.  It  is  reducing  all  bus- 
iness to  a  speculative  basis.     The  worth 


The  Development  of  Crafts 


of  all  gilt  edge  bonds  will  continue  to 
decrease  as  the  financial  standard  con- 
tinues to  depreciate.  For  the  first  time 
in  history  is  the  man  of  money  compelled 
to  consider  gold  as  no  longer  a  standard 
of  excellency  in  the  affairs  of  commercial 
exchange.  Gold  is  becoming  cheap,  not 
on  account  of  its  plenitude,  but  of  the 
little  power  required  to  get  it  compared 
with  that  of  a  hundred  years  ago  when 
its  present  price  of  $20.67  per  ounce  was 
set  by  law. 

The  problem  confronting  the  American 
people  and  insistently  demanding  a  so- 
lution is  to  place  their  system  of  finance 
on  the  machine  power  basis  with  indus- 
try. It  is  yet  performing  on  a  man  power 
basis.  It  is  obsolete.  It  is  unethical.  It 
belongs  with  the  sickle  and  the  flail.  It 
is  inadequate  to  meet  the'  demands  of 
the  machine  power  of  industry.  Gold  is 
now  an  obstruction  in  American  business. 
It  is  of  the  system  of  barter.  It  is  the 
last  hold  of  monarchy  on  the  western 
world. 

Until  the  national  monetary  commis- 
sion shall  report  to  congress  for  the  de- 
monetization of  gold,  the  American  peo- 
ple will  continue  to  experience  the  rising 
of  prices  on  the  market,  the  increasing 
troubles   in   finance   and   the   growing  bur- 


The  Further  Rising  of  Price* 


dens  of  living  in  the  city.  Only  by  know- 
ing of  the  absolute  standard  of  value,  can 
the  American  people  successfully  ride  the 
coming-  financial  storm  and  be  masters  of 
their  circumstances. 

The  great  problem  now  before  the  Ameri- 
can people  is  the  rising  price  question. 
How  long  will  prices  continue  to  rise  is 
becoming  a  serious  question  to  men  of 
finance  and  industry,  as  well  as  to  those 
earning  wages  and  salaries  and  living  on 
a  fixed  income.  High  prices  are  no  bet- 
ter or  worse  than  low  prices  in  the  wel- 
fare of  man.  Harm  arises  in  the  transi- 
tion from  one  condition  to  the  other.  By 
rising  prices,  salaries  and  wages  become 
inadequate  for  the  standard  of  living.  By 
falling  prices  people  are  thrown  out  of 
business  and  employment  by  "over-pro- 
duction." Stability  in  prices  is  desired 
to  secure  the  welfare  of  all. 

The  price  question  involves  every  prob- 
lem in  the  realm  of  finance  and  industry. 
Its  factors  are  many,  and  their  varied 
combinations  make  a  perplexity  truly 
amazing  in  the  modern  world  of  business. 
To  conceive  of  the  price  question  rightly 
demands  not  so  much  of  the  power  of 
intellect  as  in  the  system  of  thought.  The 


The  Cheapening  of  Gold 


great  educational  need  of  the  day  is  the 
right  manner  of  thinking  on  the  problems 
of  finance  and  industry.  The  universities 
and  schools  are  sadly  deficient  in  their 
instruction  in  this  respect.  To  deduce  a 
correct  system  of  thought  in  this  line  is 
the  scientific  duty  of  the  day. 

The  commanding  and  central  factor  of 
the  rising  price  question  is  the  machine 
power  of  industry.  With  a  population  of 
87,000,000  the  intelligence  of  our  people 
operates  in  terms  of  no  less  than  100,000,- 
000  horse  power  in  the  production  of 
wealth.  Counting  eight  persons  as  hav- 
ing the  working  capacity  of  one  horse 
power,  America  has  the  same  as  800,000,- 
000  iron-workers  performing  its  basic  toil. 
This  machine  power  is  increasing  at  a 
prodigious  rate.  The  problem  of  indus- 
try now  is  not  so  much  to  harmonize  men 
in  their  contentions  over  "open"  and 
"closed"  shops,  and  wages  and  hours  as 
to  adjust  these  iron-workers  in  their  craft 
developments.  From  this  movement  of 
craft  development  of  machine  power  as 
the  root  and  trunk  of  modern  business 
activity  proceed  the  branches,  limbs, 
twigs  and  leaves  of  every  problem  of  the 
price    question. 

The  craft  is  a  division  of  industry  en- 
gaged in  the  production  of  commodities 


10  The  Further  Rising  of  Prices 

based  upon  a  definite  resource  or  service. 
The  iron  craft  includes  all  intelligence 
and  machine  power  having  to  do  with 
the  making  of  iron  ore  into  its  infinite 
variety  of  products.  The  miners,  manu- 
facturers and  hardware  dealers  represent 
the  stages  of  production.  The  price  of 
any  iron  commodity  therefore  begins  at 
the  mines  and  augments  until  sold  by 
the  retail  dealer  to  a  consumer.  Hence, 
individuals  of  the  iron  craft  are  interested 
in  having  good  prices  for  their  products 
upon  the  market. 

The  same  argument  holds  good  in  the 
glass  craft,  the  cotton  craft,  the  oil  craft, 
the  coal  craft,  the  paper  craft,  the  milk 
craft,  the  meat  craft,  the  fruit  craft  and 
every  other  line  of  production  organized 
from  a  resource  to  its  completed  product? 
to  sustain  a  proper  price  upon  the  mar- 
ket. It  is  obvious  therefore,  that  each 
craft  when  developed  holds  a  monopoly 
price  against  its  consumers,  which,  of 
course,  are  the  other  crafts.  Those  hav- 
ing first  developed  have  benefited  there- 
by at  the  expense  of  the  remainder  of 
unorganized  industry.  They  are  doing  so 
now.  They  have  high  prices  in  terms  of 
the  undeveloped  crafts.  From  this  con- 
dition of  things  arises  much  complaint 
over  the  price  question.     Especially,  has 


The  Depreciarion  of  Gilt  Eldge  Bonds  1 1 

it  been  true  of  the  unorganized  in  agri- 
culture. This  craft  development  is  there- 
fore, one  of  the  basic  factors  in  the  price 
question  and  obviously,  one  of  great  im- 
portance and  power.  The  proper  distri- 
bution of  wealth  is  wholly  dependent  on 
proper  prices  between  the  crafts. 

It  is  easily  seen  that  the  capital  and 
labor  of  any  craft  are  of  necessity  com- 
pelled to  guard  each  other's  interests  in 
preference  to  those  of  the  capital  or  the 
labor  of  any  other  craft.  That  is,  the 
labor  of  a  craft  shall  be  more  solicitous 
in  aiding  its  capital  to  sustain  high  prices 
for  their  commodities  on  the  market  than 
to  lower  them  by  aiding  the  labor  of 
any  other  craft  to  operate  a  strike.  Like- 
wise the  capital  shall  have  the  same  at- 
titude toward  its  labor  in  preference  to 
the  capital  of  any  other  craft.  For  only 
by  proper  prices  can  profits  be  secured 
for  wage  and  income.  Experience  also 
has  shown  that  it  is  easier  to  divide  an 
ample  profit  with  little  contention  than 
a  small  profit  with  great  force.  Hence 
in  the  craft  development  of  capital  and 
labor  are  seen  the  units  of  individualism 
of  magnificent  dimensions  that  are  to 
manifest  in  the  United  States  in  the 
twentieth  century.  Craft  rights  are  as 
essential  as  state  rights  in  the  American 


12  The  Further  Rising  of  Prices 

republic.  Craft  rights  can  be  secured  only 
by  equity  in  price  powers  upon  the  mar- 
ket. 

There  is  one  craft  at  present  enjoying 
the  special  privileges  of  the  federal  gov- 
ernment. Its  product  has  set  a  price  and, 
how^ever  plentiful  it  may  become  or  how- 
ever easily  it  may  be  got,  its  price  re- 
mains the  same.  This  product  is  gold. 
An  ounce  of  it  is  priced  to  the  market 
for  $20.67,  whether  it  is  worth  that 
amount  or  one-thousandth  of  it.  Now, 
there  is  an  understanding  between  the 
federal  government  and  the  other  crafts 
that  23.22  grains  of  this  yellow  metal 
shall  be  called  a  dollar  and  be  worth 
100  cents.  Now,  it  continues  to  cost  less 
by  machine  power  to  get  these  few  grains 
of  gold,  what  must  the  other  crafts  charge 
the  gold  craft  for  their  products?  Evi- 
dently, to  get  a  square  deal,  they  must 
raise  their  prices  against  the  gold  craft 
proportionally  as  the  cost  of  gold  becomes 
less.  Hence,  to  perform  this  act  of  jus- 
tice to  themselves,  they  will  continue  to 
raise  their  prices  upon  the  market  until  gold 
is  demonetized. 

From  the  craft  development  of  the 
machine  power  of  industry  and  the 
cheapening  in  the  production  of  gold  are 
derived  other  reasons  why  prices  will  con- 


The  Increasing  Speculatton  in  Business  13 

tinue  to  rise  upon  the  market.     They  are 
as   follows : 

1.  The  increasing  deposits  of  surplus 
wealth  as  capital  for  investment. 

2.  The  increasing  plenitude  of  easy 
credit  for  speculative  operation. 

3.  The  increasing  plenitude  of  gold 
for  currency  purposes. 

4.  The  decreasing  necessity  of  gold 
for  redemption  purposes. 

5.  The  decreasing  purchasing  power 
of  the  gold  dollar. 

6.  The  increasing  power  of  the  busi- 
ness  world  to  make   its  own   money. 

7.  The  increasing  power  of  the  busi- 
ness world  to  prevent  panics  and  to  con- 
trol depressions. 

8.  The  increasing  demands  of  the 
American  people  to  satisfy  a  rising  stand- 
ard of  living. 

All  of  these  causes  acting  together  and 
intensified  by  the  prodigious  increase  of 
machine  power  will  soon  make  it  abso- 
lutely necessary  to  demonetize  gold  to 
prevent  the  demoralization  of  business 
by  the  raising  of  prices  upon  the  market. 
Until  gold  is  demonetized,  prices  will 
continue  to  rise  and  the  worth  of  all 
forms  of  deferred  payments  will  continue 
to  fall  on  account  of  rising  interest  rates. 

The    question    paramount    before    the 


14  The  Further  Risinig  of  Prices 

American  people  today,  therefore,  is  not 
tariff  revision,  nor  traffic  rates,  nor  val- 
uation, nor  capitalization,  nor  watered 
stock,  nor  income  tax,  nor  trusts,  nor 
government  ownership.  The  question 
paramount  today  is  rising  prices  caused 
by  the  depreciating  standard  of  value. 
This  question  leads  all  other  questions 
necessary  for  the  progress  and  welfare 
of  the  American  people.  It  is  introduc- 
tory to  every  other  problem  in  their  en- 
tire system  of  business.  When  it  is 
rightly  understood,  all  other  questions  in 
finance  and  industry  will  be  easily  for- 
mulated for  solution.  Who  can  not  prop- 
erly discuss  this  problem  of  rising  prices 
and  its  solution  can  present  little  of  lead- 
ing and  vital  importance  for  our  future 
welfare  and  happiness. 

Prices  today  are  relatively  high.  They 
will  be  higher  tomorrow  and  next  year 
and  for  several  years  to  come.  They 
will  continue  to  rise  on  account  of  the 
increasing  use  of  machine  power  for  the 
production  of  wealth  which  causes  a  de- 
preciating standard  of  value  which  causes 
an  increasing  amount  of  credit  to  be  placed 
on  the  market  which  catises  an  increasing 
demand  for  reserves  for  currency  purposes, 
which  causes  an  increasing  demand  for  gold 
and  high  grade  securities,  which  causes  an 


The  Increasing  Extravagance  in  Living  '5 

increasing  amount  of  investment  for  the 
production  of  gold  and  more  high  grade  se- 
curities, which  causes  an  increasing  pleni- 
tude and  cheapening  in  production  of  both, 
ivhich  causes  the  decreasing  purchasing 
power  of  the  dollar,  which  causes  the  in- 
creasing rise  of  prices  on  the  market,  which 
causes  an  intensified  increase  in  credit  and 
deposits,  which  causes  an  intensified  rela- 
tive scarcity  of  currency,  zvhich  causes 
an  intensified  supply  of  financial  paper 
for  purposes  of  domestic  exchange,  which 
causes  an  mtensified  inducement  for  spec- 
ulation, which  causes  an  intensified  de- 
mand for  commodities,  zvhich  causes  an 
intensified  necessity  for  price  control  on 
the  market,  zvhich  causes  an  intensified 
condition  for  monopolies,  zvhich  causes 
the  trusts  of  capital  and  labor  to  inten- 
sify in  their  craft  development  to  bal- 
ance the  monopoly  prices  of  exchanging- 
crafts,  which  causes  an  intensified  de- 
mand for  intelligence  in  business,  zvhich 
causes  an  intensified  demand  for  increase 
in  salaries  and  wages,  zvhich  causes  an 
intensified  standard  of  living,  zvhich 
causes  an  intensified  immigration,  which 
causes  an  intensified  increase  in  popula- 
tion, zvhich  causes  an  intensified  demand 
for  goods  and  services,  which  causes  an 
intensified     demand     for    currency,    which 


16  The  Further  Rising  of  Prices 

causes  an  increased  intensified  demand  for 
gold,  which  causes  an  increased  intensified 
demand  for  machine  power  for  the  produc- 
tion of  wealth  to  satisfy  the  increasing 
wants  of  man.  All  of  which  will  continue 
to  intensify  in  their  various  movements  un- 
til gold  is  demonetized  and  the  system  of 
finance  shall  be  based  upon  the  absolute 
standard  of  value. 

It  is  obvious  that  only  those  of  busi- 
ness who  can  think  in  terms  of  energy 
will  lead  in  the  scientific  discussion  of 
the  financial  question.  It  is  plain  why 
the  financial  situation  and  requirements 
are  not  understood  today  by  the  classical 
economists.  Their  paradoxes  are  per- 
plexing and  unaccountable.  Gold  was 
never  more  plentiful  than  today,  yet  it  is 
scarce  in  the  market.  And  though  its 
scarcity  is  plainly  perceived  it  is  becom- 
ing cheap.  In  former  times  a  plenitude 
of  gold  never  could  mean  a  scarcity  of 
gold,  nor  has  a  scarcity  of  gold  ever  ac- 
companied a  rise  in  prices  on  the  market. 
These  paradoxes  become  easily  under- 
stood only  when  apprised  that  the  finance 
of  the  world  is  now  expressing  in  terms 
of  machine  power.  Hence,  the  exchanges 
of  the  services  of  the  world  will  soon 
cease  to  be  performed  in  terms  of  gold. 
Since  the  American  people  excel  in  the 


The  Tariff  as  a  Statute  Price  1 7 

manipulation  of  energy,  they  will  lead 
the  world  in  the  solution  of  the  financial 
problem.  The  etiforts  of  their  second  cen- 
tury will  be  but  extensions  cf  the  works 
of  their  first. 

iPinanctal 

What  the  pendulum  is  to  a  clock  the 
unit  of  account  is  to  the  mechanism  of 
commercialism.  As  the  one  is  a  dimen- 
sion of  motion,  the  other  is  a  dimension 
of  service.  Changing  the  dimension  of 
the  former  alters  the  record  of  time ;  of 
the  latter,  alters  the  prices  of  commodi- 
ties on  the  market.  Decreasing  the  di- 
mension of  the  pendulum  raises  the  rec- 
ord of  time ;  of  the  unit  of  account,  raises 
prices  on  the  market.  It  matters  not  as 
to  the  substances  of  which  these  units  are 
made,  if  their  dimensions  remain  con- 
stant their  measurements  remain  invari- 
able. The  scientific  problem  now  con- 
fronting the  world  of  finance  is  to  estab- 
lish an  invariable  dimension  for  the  unit 
of  accoimt.  This  is  a  problem  of  science 
second  to  none  since  the  days  of  Coper- 
nicus. 

The  dimension  of  the  unit  of  account 
is  the  unit  of  service  used  in  producing 
commodities  for  the  market.  It  is  the 
unit  of  cost.     It  is  the  amount  of  energy 


18  The  Further  Rising  of  Prices 

dissipated  to  perform  a  definite  amount 
of  work  in  the  processes  of  business.  It 
is,  therefore,  the  unit  of  value.  Since 
marketable  wealth  is  but  the  resources 
of  nature  modified  by  work  into  such 
forms  as  can  satisfy  the  wants  of  man, 
it  is  obvious  that  no  wealth  whatever  can 
be  secured  from  nature  without  a  certain 
amount  of  energy  being  dissipated.  The 
more  energy  there  is  dissipated  to  get 
an  object  the  greater  is  its  cost.  The 
unit  of  energy  used  to  measure  the  cost 
is  the  dimension  of  the  unit  of  account. 
If  the  energy  dissipated  to  perform  the 
work  of  cost  is  used  by  an  animal  ma- 
chine, it  is  rated  in  terms  of  time.  This 
results  into  a  variable  dimension,  how- 
ever. It  is  used  to  rate  the  unit  of  ac- 
count in  the  world  of  finance  today. 

The  basic  cause  of  the  rise  of  prices 
for  the  last  decade  on  the  markets  of  the 
world  is  the  decreasing  dimensions  of  the 
units  of  account.  By  international  agree- 
m;ent,  a  unit  of  gold  has  been  selected  as 
the  universal  instrument  of  financial  ex- 
change. An  ounce  of  gold  is  worth 
$20.67  in  terms  of  the  unit  of  account  of 
American  finance.  That  is,  the  amount 
of  energy  of  animal  power  as  dimension 
of  the  unit  of  account,  must  be  multi- 
plied   by   20.67    to   obtain   the    cost   of   an 


The  Increasing  of  Capitalization  1 9 

ounce  of  gold.  This  is  the  dimension 
legalized  in  1834  when  an  ounce  of  sil- 
ver was  supposed  to  cost  $1.29  in  terms 
of  the  same  unit  of  account. 

Since  that  date  man  has  discovered  an 
infinitude  of  gold  for  currency  purposes 
and  he  is  obtaining  it  at  a  rapidly  de- 
creasing rate  of  cost.  It  is  being  pro- 
cured by  machine  power.  It  is  being  pro- 
duced by  the  forces  of  nature  operating 
through  metal  machines  all  but  automat- 
ically. Hence  the  cost  of  gold  is  being 
reduced  and  that  to  such  an  extent  as 
to  derange  the  mechanism  of  the  entire 
world  of  finance  and  industry.  What  to 
place  in  its  stead  as  a  representative  of 
the  unit  of  account  is  now  the  disturbing 
question  of  business.  The  high  and  ris- 
ing prices  of  commodities  and  falling  se- 
curities will  force  a  world  discussion  of 
the  money  question.     The  issue  is  now 

on. 

Never  before  this  century  has  it  been 
possible  to  perform  a  scientific  discus- 
sion of  the  money  question.  That  is, 
man  has  never  before  been  permitted  to 
interpret  it  in  terms  of  energy.  For  no 
subject  whatever  having  to  do  with  the 
progress  of  man  can  be  interpreted  scien- 
tifically without  the  philosophy  of  ener- 
gy.     Value    is    of   power.      Power   is   of 


20  The  Further  Rising  of  Prices 

energy.  Things  having  energy  have 
value.  Corn  and  wheat  are  of  energy. 
Gold  is  of  color,  weight  and  sound.  Gold, 
therefore,  is  not  of  value. 

Previously,  the  money  question  has 
been  considered  wholly  in  terms  of  gold 
or  silver  or  some  material.  A  dollar  to- 
day is  all  but  universally  conceived  as  a 
material  object  in  minted  or  printed  form 
rather  than  as  a  unit  of  service  which 
the  form  represents.  Any  form  of  cur- 
rency or  money  is  but  a  token  for  a  defi- 
nite amount  of  service  rated  in  terms  of 
the  unit  of  account.  The  minted  or 
printed  unit  of  legal  tender  is  no  more 
a  dollar  than  a  portrait  is  a  person.  The 
unit  of  account  as  the  unit  of  service,  as 
the  unit  of  value,  as  the  unit  of  energy 
uncarnatc  dissipated  to  produce  market- 
able zvealth  is  the  basic  and  central  fact  of 
justice  in  scientific  finance  and  industry. 

Since  all  wealth  is  but  the  result  of 
work  having  been  performed  on  the  re- 
sources of  nature,  pieces  of  metals  have 
been  used  as  counters  for  the  service 
performed.  A  gold  ounce  in  1834  rep- 
resented 15.98  times  as  much  service  as 
a  silver  ounce.  The  machine  power  of 
industry  deranged  this  ratio  of  service 
so  badly  that  silver  has  been  discarded 
as   a   criterion    for   rating   service    in   the 


The  Increasing  of  Interest  Rates 


production  and  distribution  of  wealth. 
Gold  is  now  showing  the  same  poor  qual- 
ity for  rating  services  in  the  processes  of 
business.  It  is  becoming  cheap.  The 
dimension  of  the  unit  of  account  for  which 
it  is  the  legal  token  is  growing  smaller 
day  by  day.  The  gold  unit  is  losing  its 
purchasing  power.  Since  service  makes 
worth,  other  things  by  comparison  are 
increasing  in  their  worths.  And  since 
the  price  is  worth  rated  in  terms  of  the 
unit  of  account,  prices  will  continue  to 
rise  and  securities  to  fall  until  23.22  grains 
of  gold  shall  cease  to  represent  the  dollar. 
That  is,  until  gold  is  demonetized  and  the 
unit  of  account  is  based  upon  an  invari- 
able unit  of  service.  Every  kilowatt  hour 
of  energy  sold  as  a  commodity  on  the 
market  promotes  the  demonetization  of 
gold  and  the  establishment  of  the  abso- 
lute standard  of  value. 

Prudent  Americans  of  finance  there- 
fore, w'ill  dispose  of  their  holdings  of 
gold  as  soon  as  possible.  Soon  the  re- 
serves of  financial  institutions  will  be 
based  on  the  potent  securities  of  living 
industry  rather  than  on  the  inert  piles  of 
the  yellow  metal.  Other  nations  of  the 
earth  not  being  so  far  developed  in  their 
economies  of  government,  yet  consider 
gold  as  a  foundation  of  all  finance  and 


22  The  Further  Rising  of  Price* 

industry.  They  are  struggling  with  the 
social  problems  of  government,  those  of 
church,  state  and  school.  They  have  yet 
to  establish  the  principle  of  liberty.  They 
have  yet  to  emerge  from  the  chrysalis  of 
monarchy  and  to  assume  the  imago  of 
Democracy.  America  has  the  blessed 
privilege  of  being  first  to  interpret  the 
requirements  of  nature  in  human  gov- 
ernment. For  134  years  have  the  Ameri- 
can people  held  fast  to  the  grand  idea 
through  vicissitudes  not  experienced  by 
any  other  nation  of  history.  Their  prob- 
lem of  this  day,  it  is  a  world  problem, 
is  to  interpret  this  ideal  in  its  economic 
requirements.  Its  imperative  requires 
the  riddance  of  gold  as  a  basic  relation 
from  the  system  of  finance  and  the  es- 
tablishment of  an  American  system  of 
economics  that  shall  be  interpreted  in 
terms  of  energy. 

31nDu0trial 

The  basic  problems  of  American  prog- 
ress as  emanating  from  the  constitution 
are  social,  political,  federal  and  economic. 
The  social  and  political  problems  now 
have  practical  solutions.  They  were  com- 
pleted at  the  close  of  the  civil  war  when 
the  principle  of  power  and  control  of 
federal    government    was    forever    estab- 


The  Increasing  Evil  of  Anti-Trust  Laws  23 

lished  as  being  superior  and  paramount 
to  the  power  and  control  of  any  of  its 
parts.  The  economic  problems  in  the 
meantime  were  developing  into  forms 
never  before  seen  in  the  history  of  gov- 
ernment. They  are  now  at  that  stage  of 
progress  to  require  adequate  laws  for 
federal  co-ordination  and  control. 

The  logic  of  all  control  as  incorporated 
in  the  constitution  was  made  in  terms  of 
political  and  social  relations.  They  be- 
long to  the  psychology  of  energy  incar- 
nate, i.  e.,  of  man  power.  The  affairs 
of  business  are  today  wrongly  interpreted 
in  these  terms.  They  are  wrongly  con- 
sidered therefore  as  subjects  of  political 
operations  and  adjustments.  Since  the 
corporate  relations  of  business  have 
neither  social  nor  moral  interpretation 
whatever,  confusion  must  necessarily 
abound  in  the  attempt  to  adjust  their 
relations  by  the  political  roles  of  gov- 
ernment. The  logic  of  economics  in  the 
American  government  must  be  under- 
stood before  the  problems  of  business  can 
find  their  proper  solutions.  They  be- 
long to  the  psychology  of  energy-  uncar- 
nate,  i.  e.,  of  machine  power. 

After  the  establishment  of  the  consti- 
tution the  affairs  of  trade  began  to  as- 
sume larger  and  more  effective  forms  of 


24  The  Further  Rising  of  Prices 

expression.  The  coming  of  the  steam 
engine  for  power  and  locomotion  and  the 
telegraph  for  the  transmission  of  intelli- 
gence made  conditions  and  opportunities 
for  successful  trade  beyond  the  power  of 
the  personal  individual  to  assume.  In 
consequence  the  logic  for  relating  the 
affairs  of  business  in  the  American  gov- 
ernment was  forever  changed.  The  states 
of  the  union  permitted  corporate  entities 
operating  machine  power  to  be  created 
and  clothed  with  all  the  rights  and  limi- 
tations of  personal  individuals  in  the  af- 
fairs of  interstate  trade. 

The  dimensions  and  activities  of  these 
creations  of  estate  ultimately  became  an 
index  to  the  progress  and  prosperity  of 
the  American  people.  They  not  only 
grew  to  the  limits  of  the  states  in  which 
they  were  created  to  operate,  but  ex- 
tended their  business  into  other  states 
and  throughout  the  nation.  There  arose 
in  consequence  the  problems  of  interstate 
commercial  corporate  responsibilities. 
These  corporate  entities  by  their  superior 
organization,  equipment  and  directive 
abilities  and  with  their  more  favorable 
prices,  equality  of  goods  and  better  serv- 
ices, began  to  displace  the  trade  of  the 
lesser  factors  of  business  in  the  general 
market. 


The  Higher  Wages  and  Shorter  Hours  25 

This  successful  development  of  cor- 
porate business  made  widespread  antag- 
onism and  resentment  among  the  people 
and  which  became  expressed  in  statutory 
form  as  anti-trust  laws.  There  has  arisen 
in  consequence  a  confusion  in  business 
and  politics  and  federal  affairs  such  that 
the  American  people  are  again  confronted 
with  the  gigantic  problem  of  eliminating 
the  evils  of  arbitrary  laws  in  interstate 
trade  by  powers  of  federal  control.  The 
distinction  of  confusion  today  with  that 
of  1787  is  in  having  not  only  business 
problems  of  larger  dimensions  but  of  dif- 
ferent nature.  They  are  problems  of  en- 
ergy uncarnate  expressing  as  commercial 
corporations. 

It  is  plain  that  the  federal  government 
now  lacks  adequate  powers  for  effective 
control  of  these  corporate  forms.  The 
political  states  have  created  business 
problems  beyond  their  powers  to  super- 
vise. Not  only  does  the  welfare  of  the 
political  states  now  require  a  rightful  so- 
lution of  this  commercial  corporate  prob- 
lem as  well  as  that  of  the  federal  gov- 
ernment, but  the  corporations  themselves 
are  becoming  insistent  for  an  organic  re- 
lation in  government.  It  is  now  an  ab- 
solute necessity  for  further  progress  of 
finance  and  industry. 


26  The  Further  Rising  of  Price* 

As  it  is  now,  the  corporations  have 
neither  state  nor  federal  protection  nor 
are  they  permitted  to  officiate  to  protect 
themselves.  Commercial  corporate  rights 
are  now  as  essential  for  the  stability  and 
perpetuity  of  the  American  form  of  gov- 
ernment as  political  corporate  rights.  The 
enactment  of  a  federal  craft  law  will  be 
their  natural  adjustment  in  government 
to  establish  and  sustain  them. 

The  crafts  of  American  business  are 
distinguished  by  the  specific  commodities 
and  services  which  they  deal  on  the  mar- 
ket. They  are  becoming  organically  re- 
lated to  one  another  in  a  system  of  busi- 
ness characteristic  of  the  American  sys- 
tem of  economics.  Their  ultimate  de- 
velopment will  be  monopolies  of  capital 
and  labor  iiaving  complete  control  of 
their  respective  resources,  commodities 
and  prices  on  the  market.  To  solve  the 
problem  of  relating  these  crafts  into  a 
system  where  there  shall  be  justice  of 
prices  between  them  is  the  goal  of  the 
federal  craft  law.  It  will  solve  the  prob- 
lem of  distributing  wealth  among  the 
people.  It  will  be  the  federal  congress 
of  commercial  states. 

It  is  obvious  that  progress  will  com- 
pel all  interstate  transportation  corpora- 
tions to  form  into  an  ultimate  entity  or 


The  Increasing  Immigration  27 

craft  or  commercial  state  inclusive  of  all 
railway  interests,  likewise  the  iron  inter- 
ests, coal,  oil,  glass,  wheat,  corn,  cotton, 
gold,  etc.,  respectively.  These  ultimate 
commercial  states  are  now  at  hand  and 
are  seeking  a  method  to  relate  themselves 
into  a  definite  economic  program  or  com- 
mercial congress  as  organic  factors  in 
the  federal  government.  Such  a  result 
can  be  obtained  only  by  replacing  the 
anti-trust  laws  by  a  federal  craft  law 
that  shall  incorporate  these  twenty  or 
more  commercial  states.  Their  union 
will  be  the  American  economic  program, 
the  substructure  of  the  American  repub- 
lic. It  will  complete  the  American  sys- 
tem of  psychology  as  expressed  in  the 
preamble  to  the  constitution. 

By  means  of  this  federal  congress,  the 
commercial  states  will  have  as  natural 
relation  in  federal  government  as  the  po- 
litical states.  Then  politics  will  separate 
from  business,  vocation  from  state  and 
the  business  man  will  stand  forth  in  his 
rights  second  to  none  in  the  federal  plan. 
Then  the  political  state  will  perform  as 
umpire  in  government  and  not  as  actor 
therein.  The  American  people  thereby 
will  complete  the  work  as  instituted  by 
the  fathers  in  the  immortal  declaration  in 
the  year  one  of  Americanism. 


28  The  Further  Rising  of  Prices 

XI^\)t  American  llBusinegs;  program 

The  insistent  problems  now  confront- 
ing the  American  business  program  in  its 
necessary  order  of   development  are : 

1.  The  demonetization  of  gold  and  the 
establishment  of  a  unit  of  energy  as  the 
absolute  standard  of  value. 

2.  The  development  of  corporations 
of  capital  and  labor  into  their  respective 
crafts  or  commercial  states  to  control  the 
prices  of  their  commodities  on  the  mar- 
ket. 

3.  The  repeal  of  all  anti-trust  laws 
and  the  enactment  of  a  federal  craft  law 
to  incorporate  these  commercial  states 
under  federal  control. 

4.  The  establishment  of  a  federal  con- 
gress of  these  commercial  states  to  jus- 
tify their  prices  in  the  processes  of  mu- 
tual  exchange. 

5.  The  establishment  of  a  money  sys- 
tem separate  and  distinct  from  the  na- 
tional system  of  currency  and  which  shall 
be  based  on  the  absolute  standard  of 
value. 

6.  The  establishment  of  a  national  sys- 
tem of  clearing  houses  rather  than  that 
of  a  national  or  central  bank. 

7.  The  establishment  of  a  federal  law 
that  all  economic  interpretation  shall  be 
made  in  terms  of  energy. 


The  Increasing  Strife  in  Cities  29 

tE^tje  ^orlD  ifinancial  ^totm 

The  commercial  crisis  of  1907  has  yet 
to  be  explained  by  the  political  econo- 
mists. The  troubles  of  '37-'57-73-'93  fur- 
nish no  explanation  for  it.  The  former 
crises  were  caused  by  the  inadequacy  of 
a  currency  system  to  satisfy  the  opera- 
tions of  a  fast  growing  system  of  credit. 
That  of  1907  was  caused  by  a  depreci- 
ating standard  of  value  and  which  is  the 
first  instance  to  be  recorded  in  the  his- 
tory of  finance.  The  diagnosis  of  the 
cause  of  this  crisis  is  as  follows : 

1.  The  depreciation  of  the  standard 
of  value  on  account  of  wealth  being 
cheaply  produced  by  machine  power. 

2.  The  raising  of  prices  of  commodi- 
ties and  services  on  account  of  the  de- 
creasing purchasing  power  of  the  gold 
dollar. 

3.  The  depreciation  of  railway  bonds 
on  account  of  rising  prices  of  commodities 
and  services  and  hostile  politics  and  re- 
strictive legislation  against  railway  rates. 

4.  The  decreasing  power  of  the  rail- 
roads to  borrow  on  long  time  bonds. 

5.  The  increasing  rate  of  interest  on 
short  time  bonds. 

6.  The  decreasing  power  of  the  rail- 
roads to  purchase  supplies  for  construc- 
tion and  operation. 


30  The  Further  Fusing  of  Prices 

7.  The  decreasing  market  for  all  com- 
modities of  manufacture  entering  into  rail- 
way supplies. 

8.  The  closing  down  of  industries  and 
the  unemployment  of  labor  engaged  in 
transportation  and  producing  these  sup- 
plies. 

9.  The  loss  of  confidence  in  credit  by 
slow  collections  and  settlements. 

10.  The  refusal  of  banks  to  exchange 
only  in  terms  of  currency. 

11.  The  loss  of  confidence  by  deposi- 
tors and  the  withdrawal  of  currency. 

12.  The  inadequacy  of  $3,000,000,000 
of  currency  to  satisfy  $13,000,000,000  of 
deposits  and  the  refusal  of  banks  to  pay 
out  currency  on  deposits. 

Hence  the  panic  and  afterwards  the  de- 
pression. 

The  panic  has  ceased.  The  depression 
will  disappear  as  the  railways  resume 
their  purchases  of  supplies  on  the  market. 

Frequent  and  growing  crises  must  now 
be  expected  until  gold  is  demonetized  and 
the  system  of  finance  shall  be  based  on 
an  absolute  standard  of  value.  This  will 
happen  at  no  late  day.  Such  will  result 
from  the  coming  financial  storm. 


The  Demand  for  Surety  in  Business 


31 


Eocating  t^e  Coming  ^tocm 

The  welfare  of  the  rural  people  is  pro- 
portional to  the  prices  of  commodities. 
The  welfare  of  the  urban  people  is  propor- 
tional to  the  wages  divided  by  the  prices 
of  commodities.  It  is  plain  by  the  chart 
that  the  rural  welfare  was  increasing  from 


^     I     n 

t&50  1    Ta6o 


Y°l  Y 


] — ^~l — r 


7670  (     »'S0        7690   \    '900  \    I^IO 

Ml 


Chart  showing  progress  of  the  American  people  from 
1850  to  1910 

1850-1870  and  decreasing  from  1870  to 
1898.  Since  1898  it  has  been  increasing  at 
a  rapid  rate.  The  urban  welfare  rose  rap- 
idly from  1870  to  1898.  Since  1898  it  has 
been  downward  as  is  indicated  by  the 
heavy  dark  line. 


32  The  Further  Rising  of  Prices 

The  coming  financial  storm,  therefore, 
will  have  its  greatest  effects  in  the  large 
cities.  The  cost  of  living  will  continue  to 
increase  faster  than  the  rise  of  income  un- 
til gold  is  demonetised  and  the  system  of 
finance  shall  be  based  on  the  absolute 
standard  of  value.  The  heavy  dark  line 
will  continue  downward  until  the  financial 
storm  shall  cease. 

The  National  Monetary  Commission  is 
confronted  with  a  task  second  only  in  im- 
portance to  the  world  to  the  formulation 
of  the  immortal  documents.  As  the  Dec- 
laration formulates  social  liberty  and  the 
Constitution  political  liberty,  the  mone- 
tary document  will  formulate  economic 
liberty,  the  first  instance  to  be  recorded 
in  history. 

The  central  proposition  of  the  mone- 
tary document  is  the  establishment  of  the 
absolute  standard  of  value.  Its  system 
of  thought  for  making  the  interpretation 
is  the  philosophy  of  energy.  Any  other 
method  of  procedure  for  the  American 
people  spells  failure,  the  most  miserable. 

i  Ik 


1  DD  A  DV 


Currency  is  the  instrument  of  exchange 
whose  redemptive  power  is  national  tax. 


THE  ABSOLUTE  STANDARD  AND  UNIT  OF 
VALUE  IS  THE  CENTRAL  PROPOSITION  OF  ALL 
PROGRESS  IN  THE  20TH  CENTURY.  IT  IS  THE 
KEY  TO  EVERY  PROBLEM  IN  THE  PHILOSOPHY 
OF  LIFE 


Money  is  the  instrument  of  exchange 
whose  redemptive  power  is  marketable 
wealth. 


Tliis  book  is  DUE  on  the  last 
date  stamped  below 


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3»»-2,'45(3232) 
Address  all  communications  concerning  this  treatise  to 

Ci^e  Oniteristtt  of  ti^e  Worn 

Instituted!  to  Elstablish  the  Philosophy  of  Americanism 

C.  A.  BOWSHER.  EDITOR 

Caxton   Building.  Cleveland,  Ohio 


The  Calvert-Hatch  Co..  Printprs 


AA    000  603  200    7 


HG 

558 

B68g 


